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A borrower is purchasing a home and the debt to income is over our policy, however, an approved exception can be made. The borrower’s grandfather (who is a director of our bank) has offered to sign as co-borrower to help strengthen the loan. However, we are not using any income from the grandfather/co-borrower to calculate ability to repay. Given that fact, if we don’t use his income, must we use/verify his assets and real estate…taxes, insurance, etc?
Your assistance is always appreciated!
If the director is being considered as the co-borrower on the loan, I would consider proving his ability-to-repay in the same manner you would co-borrowers on all mortgage related loans. If income is typically utilized to strengthen the loan and prove ability to repay then I would consider it on this loan as well. You also have to consider that this loan includes a director and should be underwritten with the same standards as required of all borrowers.
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